“The implementation of the credit-positive system will alert local governments of fiscal pressures and may encourage them to utilize some of New York State’s remedial programs before stress builds further,” Moody’s said. “It remains to be seen whether the system will provide a material benefit in addressing current and future financial challenges.”

Moody’s points out that the comptroller’s office does not have the authority to compel local governments to change their financial practices like some other states. North Carolina, for example, has a Local Government Commission that has to approve local government debt.

“The initial application of the monitoring system will likely identify those local governments that the state is already aware of that are under fiscal stress. Over time, however, the comptroller expects the system to identify localities that are susceptible to fiscal stress, allowing the state and local government to develop a plan of action before the fiscal stress becomes acute,” Moody’s said.